• Load Performance: 7.3% and 6.3% growth in the concession area, driven by residential consumption.

• EBITDA: Decreased by 7.1%, reaching BRL8 billion and EUR6.7 million.

• Profit: Dropped by 11%, totaling BRL1.2 billion.

• Debt: BRL2.8 billion with a leverage of 2.01.

• CapEx: Increased by 12%, reaching BRL1.4 billion and EUR2.4 million.

• Market Growth: 6.1% overall, with residential and commercial areas growing by 11%.

• Delinquency Rate: 1.8%, with an average ticket increase of 13% over the last year.

• Distribution Losses: Increased due to low-tension class growth and fraud stimulation.

• Generation: Decrease in generation by 11% due to wind turbine availability and restrictions.

• Leverage: BRL26.2 million with a leverage ratio of 2.01.

• Debt Issuance: BRL1.6 billion in debentures with a competitive rate of 0.19.

• Average Debt Cost: Reduced from 11.1% to 10.9%.

• CapEx Plan: Expected to close the year with BRL5.9 billion.

• Warning! GuruFocus has detected 7 Warning Signs with BSP:CPFE3.

Release Date: August 09, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CPFL Energia SA (BSP:CPFE3) reported a strong performance in residential and commercial consumption, with growth rates of 7.3% and 6.3% respectively.

• The company celebrated significant milestones, including the 5-year anniversary of its IPO and 20 years since listing on the stock exchange.

• CPFL Energia SA received important recognitions for corporate governance and customer focus, highlighting its operational quality.

• The company demonstrated resilience in recovering from the impacts of floods in Rio Grande do Sul, with operations largely restored.

• CPFL Energia SA showed a positive outlook for market growth, particularly in the industrial sector, with faster-than-expected recovery post-crisis.

Negative Points

• EBITDA dropped by 7.1%, with a corresponding 11% decline in profit, attributed to various impacts including those from 2023 and 2024.

• The company faced significant operational disruptions due to floods, affecting 100% of its concession area and disconnecting 350,000 customers.

• There was an increase in delinquency rates to 1.8%, posing challenges in bill payments and recovery of power cuts.

• Distribution losses increased across all concession areas, driven by higher low-tension class growth and increased fraud stimulation.

• The company experienced a decrease in wind generation by 11% due to restrictions and low wind performance, impacting overall generation results.

Q & A Highlights

Q: Could you please comment about the expectation in relation to the conclusion of the new terms referring to the process of renewal of the distribution contracts? A: The process is currently with ANEEL, and the auction process is delayed. The conclusion and the opening of the auction have not yet occurred. Considering a public bidding process of 45 days, the expectation is that this process will be delayed, but it's difficult to specify when it will take place. - Gustavo Estrella, CEO